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Introduction of an electrically powered bike for city

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Reference no: EM131911178

Hank Auto in Tokyo, Japan is considering the introduction of an electrically powered bike for city use. The bike project requires an initial investment of ¥15.6 billion. The cost of capital is 11%. The initial investment can be depreciated on a straight-line basis over the 10-year life of the project. Profits are taxed at a rate of 50%.

Consider the following project estimates:

Market size 1.16 million

Market share .1 Unit price ¥ 460,000 Unit

variable cost ¥ 420,000

Fixed cost ¥ 2.06 billion

A. What is the NPV of the electric bike project?

Reference no: EM131911178

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